Closing the loop 05 December 2022

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is stronger at R17.23/$ (R17.57/$*) today; it ranged between R17.15/$ and R17.43/$.
The currency is below its 50-day and 100-day moving averages (R17.78/$ and R17.39/$) and above its 200-day moving average (R16.49/$).
EM currencies are mixed today; the ZAR (+1.6%), CNY (+1.5%) and BGN (+1.0%) are the biggest gainers; the MXN (-1.5%), RUB (-0.8%) and ARS (-0.6%) are the biggest losers.

The Eurozone Sentix investor sentiment improved in December to -21 from -30.9 in November.
The ECB’s Governing Council member Gabriel Makhlouf commented today that the bank could slow the pace of its increases after inflation moderated for the first time in 1.5 years.
Makhlouf sees borrowing costs being lifted by 50 bps at the meeting later this month.
He noted that this would be “the minimum needed” to continue bringing inflation back toward the 2% target from five times that at present.

Turkish inflation moderated for the first time in 18 months in November.
CPI came in at 84.8% y/y in November from 85.5% y/y (the highest in 24 years) in October.
CPI is still significantly higher than the central bank’s forecast for the end of the 2022.
The bank had expected CPI to have moderated to 65% at the end of the year.
The bank noted last month that it had finished its easing cycle after reducing the benchmark interest rate by a cumulative 10 percentage points to 9% since September 2021.

Locally, the industry-wide PMI for November increased more than expected to 50.6 from 49.5 in October.
New business volumes improved in November on the back of a slight recovery in demand.
New sales orders were up in November to 50.7 from 48.3 n October.
Supply conditions remained weak in November.
Output fell in November on the back of economic uncertainty and persistent loadshedding.
We look to the Q3:22 GDP (due tomorrow) which will likely register 0.4% q/q (sa), after having contracted by 0.7% q/q (sa) in Q2:22.
Eskom: Stage 3 loadshedding continues until 5am tomorrow when Stage 2 follows.

The top leaders of the ANC are in talks today to discuss the future of President Cyril Ramaphosa on the eve of a parliamentary vote.
Lawmakers are due to hold a debate in parliament tomorrow on whether to adopt the panel’s report.
The president’s lawyers have indicated that they will challenge the advisory panel’s report that said there may be grounds for the president’s impeachment.

Brent crude oil is at $87.60/bbl ($85.57/bbl*).
Gold price is at $1791/oz ($1797/oz*).
SA CDS is at 254bps (268bps*), Brazil 235bps (239bps*), Turkey 508bps (512bps*).
Yields: US 10yr at 3.54% (3.48%*), German bund at 1.87% (1.85%*) and SA 10-year generic at 11.11% (11.33%*), SA’s R186 is at 8.98% (9.16%*).
The JSE ALSI is up by 0.7% today (-0.9%*).

* Denotes Friday’s close.

Key events and data:

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